On July 18, eBay had announced a strategic partnership with Paytm Mall along with acquiring a 5.5% stake in the Indian e-commerce marketplace, the investment amount was not disclosed at the time. However, after the company’s corporate filling for the last month is accessible the deal value could be assessed to be around $160 million.
The money was received from the Singapore arm of the US-based e-commerce giant eBay. eBay Inc. is an American multinational e-commerce corporation based in San Jose, California that facilitates consumer-to-consumer and business-to-consumer sales through its website.
On the basis of per value share accorded with a valuation report of June 18, the company will be valued at $2.86 Bn post-investment. As part of this deal, eBay’s global inventory is being made available to over 130 million active users on Paytm Mall and Paytm’s app ecosystem. Paytm Mall is a subsidiary of the Indian fin-tech unicorn Paytm. It would also enable eBay sellers to reach new customers in the rapidly growing Indian market.
Paytm is an Indian e-commerce payment system and digital wallet company, based out of NOIDA, India.
Paytm offers online use-cases like mobile recharges, utility bill payments, travel, movies, and events bookings as well as in-store payments at grocery stores, fruits and vegetable shops, restaurants, parking, tolls, pharmacies and education institutions with the Paytm QR code. Paytm is the closest to being a Super App (A Super App is many apps within an umbrella app) in the Indian tech scene. As of January 2018, Paytm is valued at $10 billion.
As per the company, over 7 million merchants across India use this QR code to accept payments directly into their bank account and claim to have over 200 Mn user base. The company also uses advertisements and paid promotional content to generate revenues.
The current flow of funds has come amidst the struggling performance of the company. Paytm Mall had recorded a net loss of $245.65 Mn in FY2018, which is 150 times the loss ($1.86 Mn) it suffered in the previous financial year. Also to in order to squeeze down its expense they slashed its monthly cashback offers by 80 percent to Rs 40 crore, from a peak of Rs 200 crore last year.
According to Paytm Mall, the strategic partnership should allow it to overcome cross-border trade challenges such as high delivery costs, returns, and long timelines, while ensuring that regulatory requirements are met, including the payment of customs duties.
Till October 2018, Paytm Mall has raised $645 Mn from investors such as SoftBank, Alibaba, SAIF and Ant Financial.
According to Google India Research, India is expected to generate $100 Bn online retail revenue by 2021. Further, IBEF expects the Indian e-commerce market to grow to $200 Bn by 2026 from $38.5 Bn as of 2017. With international as well as intranational competition in the e-commerce ecosystem, accommodative collaboration is the best possible option for business giants.